Forest Preserve Bonds Nearing Vote

October 30, 1987|By William Presecky.

The Du Page County Forest Preserve Commission will be asked Monday or Tuesday to approve the sale of $100 million in general obligation bonds to finance the largest land purchase plan in the commission`s 72-year history.

The sale will result in an increase in property taxes to pay off the no-bid bonds.

So far, the commission has refused to disclose what property it would like to buy with the money.

President Charles Vaughn told the commission`s Finance and Land Acquisition Committee on Thursday that the tumult in the stock market has worked in the commission`s favor.

Du Page`s favorable bond rating, coupled with the flow of money into the tax-exempt bond market and competition for sound investments, could help to substantially lower the debt service the commission will have to pay over the life of the 20-year bond issue, Vaughn said.

He predicted that the recent activity in the stock market could result in a savings to Du Page taxpayers of between $10 million and $20 million over the bonds` 20-year payback period.

``The stock market was bad for everybody else, but for somebody who is getting ready to sell bonds it isn`t too bad,`` Vaughn said.

The financial team managing the bond sale was in New York Thursday pricing the issue, Vaughn said.

The negotiated sale of the bonds is being engineered by the New York-based investment firm of Donaldson, Lufkin & Jenrette.

Management responsibility for the issue fell to the firm this week when L.F. Rothschild & Co., the Chicago-based investment firm that was managing the sale, announced Monday that it was getting out of the tax-exempt bond business.

Vaughn said he approved allowing Gayle M. Franzen, former head of Rothschild`s public finance division, to manage the $100 million Du Page sale when Franzen signed an agreement Wednesday to work for the Donaldson firm.

``My confidence was with him (Franzen) as long as he went with a reputable firm,`` Vaughn said.

Franzen is a former aide to Gov. James Thompson.

Statistics provided by Franzen showed that at the beginning of October, bond purchasers were bidding an average of 8.6 percent on tax-exempt issues. The average rate rose to 9.2 percent on Oct. 19 but had dipped to about 8.5 percent on Wednesday.

Repayment of the bonds could require a 40 percent increase in the property taxes levied by the district.

For a Du Page property owner with a home valued at $120,000, the bond sale is expected to result in an average annual increase of about $33 in the forest preserve district`s portion of the tax bill. The district currently levies an annual tax of about $84 on such a home.

The Forest Preserve Commission voted 15-10 last month to approve the plan to sell the bonds. Fourteen affirmative votes are required to approve the sale.

The commission has refused to divulge specific details of how it intends to use the proceeds from the bond sale. In general, the commission proposes to expand its land holdings to more than 25,000 acres from the current 18,000 acres.